According to Kurdistan Press, the 25-year agreement between the Syrian transitional government and the US company HKN Energy could be a turning point in the reconstruction of Syria's oil industry. The industry has been severely damaged by 15 years of war, sanctions, destruction of infrastructure and fragmentation of territorial control. The Syrian state oil company has announced that it will begin operations in the country's northeastern oil fields with the participation of HKN Energy. The agreement was signed between the two parties in April this year and has now entered the implementation phase.The deal comes as Syria’s transitional government relies on foreign investment and technology to rebuild its energy infrastructure and ensure the country’s long-term fuel security. Washington, in turn, sees Syria as part of its broader plan to create new energy routes in the Middle East, aimed at reducing the vulnerability of energy flows to potential disruptions in the Strait of Hormuz.

After the fall of Bashar al-Assad’s regime in December 2024, the lifting of international sanctions on Syria paved the way for the entry of foreign companies, especially large energy companies. The ceasefire and integration of forces agreement reached on January 29 between Damascus and the Syrian Democratic Forces paved the way for the transfer of control of the oil fields in northern and eastern Syria to the central government.This development coincides with the US effort to create new energy routes in the region, an effort that has become more important after the escalation of regional tensions and the disruption of oil transportation through the Strait of Hormuz.

In the meantime, the role of Tom Barrack, the US ambassador to Turkey and Washington’s special envoy for Syria and Iraq, has been noted. Since any new oil transportation route between Iraq, Syria and the Mediterranean coast requires political and infrastructural coordination between these countries, Washington’s role in shaping such a framework could go beyond mere economic cooperation.

One important part of this plan is the revival of oil transportation routes between Iraq and Syria. Iraq recently began exporting oil by road to Syria and the port of Banias, from where it could be transported to European markets.Baghdad and Damascus have also agreed to revive the Kirkuk-Banias oil pipeline. The projects are part of a broader plan to create a transit and energy network in the Middle East, known as the “Four Seas Initiative.”

At the operational level, the agreement between HKN Energy and the Syrian Oil Company includes the rehabilitation of oil fields, wells, facilities and related infrastructure, as well as the implementation of projects to develop local services and infrastructure. Yousef Qabalawi, the CEO of the Syrian Oil Company, said that the government will retain control and ownership of the fields, while HKN Energy will be responsible for investment and providing technical expertise.

The revenue-sharing model is also designed in stages. Syria’s share will increase from 60 percent to 70 percent over the life of the contract, with HKN Energy’s share eventually decreasing to 30 percent.The Syrian government hopes that by gradually rebuilding the facilities and putting more wells into operation, oil production will increase and new job opportunities will be created for residents of Hasakah province and surrounding areas.

However, the development of the oil industry in northeastern Syria faces a serious contradiction: the region that holds one of the country’s main oil resources is itself facing a severe fuel shortage. Hasakah and Deir Ezzor have seen rising energy prices, shortages of gasoline and diesel, and widespread protests in recent months.

The Syrian transitional government has taken over dilapidated infrastructure from the Autonomous Administration of North and East Syria. The lack of a refinery in the northeast had forced the Autonomous Administration to use rudimentary refining methods to meet local needs and provide low-quality petroleum products to the public at subsidized prices.In addition, repeated Turkish airstrikes between 2022 and 2024 severely damaged parts of the region’s energy infrastructure.

To make up for this shortfall, Damascus is coordinating with the Ministry of Energy to transfer oil products from the Homs and Banias refineries to Hasakah. However, even this measure cannot solve the problem quickly. Syria’s domestic refining capacity is limited, and some of the crude oil produced domestically is not suitable for existing refineries. For this reason, Syria continues to be forced to import gasoline, diesel, and gas, and its fuel prices are largely affected by developments in the global energy market.

At the same time, Damascus has agreed to sharply reduce imports of Russian oil as part of its negotiations with the United States to remove it from the list of countries sponsoring terrorism.This decision shows that energy cooperation between Syria and the United States is not just an economic project, but is also linked to the geopolitical orientation and foreign policy of the transitional government.

Meanwhile, Syrian economic experts emphasize the role of private investment in the revival of the oil industry. Amer al-Deeb, head of the Syrian Renaissance Council, sees the agreement with HKN Energy as a sign of Syria’s cautious opening to foreign investment and efforts to return the country to the global oil market. He believes that years of mismanagement, reduced production and damage to the fields have meant that restoring production to pre-2011 levels will require significant investment, time and new drilling.

The Rmilan oil field and other fields in northeastern Syria have the potential to increase production, but production alone will not be a measure of the project’s economic success.The cost of extraction per barrel and fluctuations in global oil prices are also decisive. From this perspective, the development of a transport network, logistics and energy infrastructure throughout Syria is essential to attract foreign investors.

Experts also warn that the success of this deal does not depend solely on the presence of foreign companies. Damascus must create conditions in which private Syrian companies can also participate in projects, reduce bureaucracy, comply with environmental standards and combine domestic capacities with foreign technology and capital. In such circumstances, the HKN deal could become a model for the entry of foreign capital into other sectors of the Syrian economy.

However, security remains one of the biggest obstacles to long-term investment in Syria.Energy expert Diana Al-Qaisi sees the signing of a long-term contract with a US company as a positive sign, as it shows that HKN is willing to take the risk of being present in the Syrian market. However, the presence of a US company alone cannot solve the structural problems caused by political and security instability. Investors will continue to pay attention to political stability, legal clarity, the sanctions situation, investment guarantees and the security of long-term contracts.

The main question, however, is whether the revival of the oil industry can truly improve the living conditions of the Syrian people or will it simply lead to the creation of new opportunities for the government and foreign companies. While the transitional government has eliminated a significant part of state subsidies and the prices of many goods and services have increased, the Syrian people continue to face poverty, rising energy costs and fuel shortages.From this perspective, the HKN deal is at the intersection of two different trends. On the one hand, Damascus needs foreign capital and technology to rebuild its economy and meet its domestic energy needs; on the other hand, the United States and American companies are seeking to establish Syria as a new link in the region’s energy and transit network.

Projects related to the Kirkuk-Banias pipeline, the transfer of Iraqi oil through Syria, and the development of oil and gas fields in northeastern Syria could, if realized, change Syria’s place on the Middle East energy map. But realizing this vision requires massive investment, political and security stability, infrastructure reconstruction, and the creation of a reliable legal framework for investors.

Ultimately, the 25-year HKN Energy agreement cannot be seen as simply an oil deal between Damascus and an American company.The deal is part of a process of redefining Syria’s energy structure following the fall of the Assad regime, the return of control of oil fields to the central government, and the US’s efforts to shape new energy routes in the Middle East. However, unless increased oil production is accompanied by improved refining, distribution, and access to fuel for the people, the revival of the oil industry will not necessarily translate into improved livelihoods for Syrians.

In other words, the real test of the HKN agreement will not be the amount of oil extracted from the fields in northeastern Syria, but whether oil can be transformed from a source of revenue for the government and foreign companies into an engine for rebuilding the economy and providing energy for Syrian society.

Amarji Journal